1.
Wind power is a capital-intensive means of generating electricity. As
such, it competes with electricity generated by nuclear or coal-fired generating
plants (with or without carbon capture). However, because wind power is
intermittent, the management of electricity systems becomes increasingly difficult if the share of wind power in total system capacity approaches or exceeds the minimum level of demand during the
year (base load). It is expensive and inefficient to run large nuclear
or coal plants so that their output matches fluctuations in demand.
Large investments in wind power are therefore to undermine the economics of investing in nuclear or coal-fired capacity.

2.
The problems posed by the intermittency of wind power can, in
principle, be addressed by (a) complementary investments in pumped
storage, and/or (b) long distance transmission to smooth out wind
availability, and/or (c) transferring electricity demand from peak to
off-peak periods by time of day pricing and related policies. However,
if the economics of such options were genuinely attractive, they would
already be adopted on a much larger scale today because similar
considerations apply in any system with large amounts of either nuclear
or coal generation.

3.
In practice, it is typically much cheaper to transport gas and to rely
upon open cycle gas turbines to match supply and demand than to adopt
any of these options. As a consequence, any large scale investment in
wind power will have to be backed up by an equivalent investment in
gas-fired open cycle plants. These are quite cheap to build but they operate at relatively low levels of thermal efficiency, so they emit considerably more CO2 per MWh of electricity than combined cycle gas plants.

4.
Meeting the UK Government’s target for renewable generation in 2020
will require total wind capacity of 36 GW backed up by 13 GW of open
cycle gas plants plus large complementary investments in transmission
capacity – the Wind Scenario. The same electricity demand could be

met
from 21.5 GW of combined cycle gas plants with a capital cost of £13
billion – the Gas Scenario. Allowing for the shorter life of wind
turbines, the comparative investment outlays would be about £120 billion
for the Wind Scenario and a mere £13 for the Gas Scenario.

5.
Wind farms have relatively high operating and maintenance costs but
they require no fuel. Overall, the net saving in fuel, operating and
maintenance costs for the Wind Scenario relative to the Gas Scenario is
less than £500 million per year, a very poor return on an additional
investment of over £105 billion.

6. Indeed, there is a significant risk that annual CO2 emissions could be greater under the Wind Scenario than the Gas Scenario. The actual outcome will depend on how far wind power displaces gas generation used
for either (a) base load demand, or (b) the middle of the daily demand
curve, or (c) demand during peak hours of the day. Because of its
intermittency, wind power combined with gas backup will certainly
increase CO2 emissions when it displaces gas for base load demand, but
it will reduce CO2 emissions when it displaces gas for peak load
demand. The results can go either way for the middle of the demand curve
according to the operating assumptions that are made.

7.
Under the most favourable assumptions for wind power, the Wind Scenario
will reduce emissions of CO2 relative to the Gas Scenario by 23 million
metric tons in 2020 - 2.8% of the 1990 baseline – at an average cost of
£270 per metric ton at 2009 prices. The average cost is far higher than
the average price under the EU’s Emissions Trading Scheme or the floor carbon
prices that have been proposed by the Department of Energy and Climate
Change (DECC). If this is typical of the cost of reducing carbon
emissions to meet the UK’s 2020 target, then the total cost of meeting
the target would be £78 billion in 2020, or 4.4% of projected GDP, far
higher than the estimates that are usually given.

8. Wind power is an extraordinarily expensive and inefficient way of reducing CO2 emissions when compared with the option of investing in efficient and flexible gas combined cycle plants. Of course, this is not the way in which the case is usually presented. Instead, comparisons are made between wind power and old coal or gas-fired plants. Whatever happens, much of the coal capacity must be scrapped, while older gas plants
will operate for fewer hours per year. It is not a matter of old vs new
capacity. The correct comparison is between alternative ways of meeting
the UK’s future demand for electricity for both base and peak load,
allowing for the backup necessary to deal with the intermittency of wind
power.